The present-invention is related generally to automated vending machines, and more particularly to wireless management of remote vending machines.
The vending adage, “No cash, no purchase” is fast being replaced with “No cash, no problem!” Accompanying the public's increased attraction to self-service technologies and online applications is a growing interest in the implementation of alternative payment options for traditionally cash-based transactions. While some parts of the vending industry already accept card payment systems, widespread interest in expanded opportunities for cashless transactions are beginning to become more prevalent. Innovative payment technologies, designed to reshape vending transactions, have emerged and are being adopted at an unprecedented rate.
In the past, much of the slow rate of adoption of cashless vending can be attributed to customer reluctance to use cards for small dollar (i.e., low value) transactions, a lack of operator experience with new technology and its perceived high costs. Much of the customer concern, however, is being dissipated by the trend toward frequent use of cashless transactions elsewhere. For example, such technologies as ATM machines for banking, pay-at-the-pump for gasoline, retail store self-checkout, Speedpass® (a registered trademark of ExxonMobil Oil Corporation) purchasing and most recently the adoption of credit/debit card acceptance at quick fast food restaurants. From a vending operator's perspective, the cost of hardware, software and transaction processing have declined to render cashless a much more appealing payment option. Such conditions have started to draw the attention of full-line vendors, beverage bottlers and non-traditional vending suppliers as evidenced by the frequency of documented stories of success.
With more than eight million machines, the vending industry can be described as the largest cash business in the United States, and is certainly the most pervasive retail channel in terms of number of locations. A 2003 Nilson Report states, “Vending machine based (credit card) transactions are expected to be one of the growth areas for the payment processing industry in the U.S.
Although credit and debit cards generated only five million transactions valued at less than $32.5 million at vending terminals last year, these numbers could reach 200 million transactions valued at $570 million within three years.” Over the past decade, there has been a steady increase in the preference for credit cards as a method of payment. Economists point to the fact that credit card transaction volumes doubled between 1992 and 1998. In 2003, credit and debit card payments exceeded cash payments for the first time; thereby rendering card purchasing the preferred payment method of U.S. consumers. This trend is predicted to accelerate, with credit purchasing growing at a rate of 7% per annum and debit transactions expanding at the unprecedented rate of 21% annually. To date, the vending industry, which is dependent on convenience and service, remains the only major retail channel that does not universally accept cashless forms of payment. It is estimated that only 2-3% of U.S. vending machines presently offer a credit card payment option. This capability is projected to be 50% by the year 2009.
However, when adding cashless to a cash-centric payment environment, there are several critical metrics that need to be evaluated. Among the first consideration is a comparison of transaction speeds. How much slower or faster are vending cashless transactions than cash-based sales? What is an acceptable time for transaction processing? In addition, an analysis of the number of transactions and average revenue per transaction are also important evaluative criteria, including incremental revenue and unit sales and margin contribution. Knowing the operational benefits of cashless transactions on total revenue, trade loss and accountability and the like, is important when determining adoption of this technology.
In a recent study, a cold drink bottler placed two vending machines containing identical product offerings in the field. The only difference between the machines was that one machine accepted only cash transactions, while the other featured only credit card transactions. Other things assumed equal, the credit card transaction machine generated 15% more revenues and 47% of its transactions involved multiple product purchases. The fast food industry as well has announced great success with its recent addition of credit and debit card acceptance. Check averages for credit and debit card transactions showed a 35-38% increase over cash purchases. These gains were attributed to the enhanced customer payment convenience. Other success stories include significant growth in popularity of cashless transactions within the travel industry, higher vending prices and unit sales in the entertainment industry and the elimination of vandalism and theft for vending in the hotel industry.
Nevertheless, there are two major impediments to widespread adoption of cashless transactions with remote vending machines. The first is the absence of any reliable, two-way communication between such vending machines and the databases supporting those vending machines. The second is the absence of any means to further leverage the success of such vending machines by supplementing their revenue from product sales with advertising revenue.